Lessons from Power Sector Reform in England and Wales
The 1990 power reforms in England and Wales were designed to permit the introduction of competition at both the retail and the wholesale level. Generation was both vertically separated from transmission and horizontally separated. The sector was al...
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1995/10/2529229/lessons-power-sector-reform-england-wales http://hdl.handle.net/10986/11651 |
| Summary: | The 1990 power reforms in England and
Wales were designed to permit the introduction of
competition at both the retail and the wholesale level.
Generation was both vertically separated from transmission
and horizontally separated. The sector was almost completely
privatized-only the nuclear capacity was left in public
hands-and regulation was applied both to promote competition
and to ensure that the remaining monopolies did not exploit
their advantage. The new industry structure emerged with
three generating companies: National Power (52 percent of
capacity at that time) and PowerGen (33 percent), which were
privatized, with 60 percent of their shares sold initially,
and Nuclear Electric (15 percent), which was left under
public ownership. National Power's share of capacity
gave it significant market power. The national grid
company-after separation from the generating companies-was
transferred to joint ownership by the twelve privatized
regional distribution companies. (The grid company retains
control of dispatch.) Each of the twelve regional
distribution companies (RECs) has two separate
functions-distribution (through low voltage wires or, more
simply, grid to door) and retail supply (the sale of
electricity to final customers) -and these functions must be
accounted for separately. Access to the distribution
operation of the RECs is regulated so that any seller of
electricity has the right to "use" the associated
distribution network when selling to a final customer. Until
March 1995, the government retained a "golden
share" in each REC, giving it the power to block any
takeover or merger. |
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